Naveed Hussain
Utility Stores Closure Reflects Policy Failure The closure of Pakistan’s state-owned utility stores serves as a stark reminder of how successive governments have failed to reform an institution that could have become a reliable nationwide social safety net for low-income households. Established more than fifty years ago, the Utility Stores Corporation (USC) was envisioned as a shield for lower middle-class families against market volatility, providing essential kitchen items under one roof at subsidised prices. At its inception, the network modernised Pakistan’s retail sector at a time when the concept of chain department stores and supermarkets was largely unfamiliar to local consumers.
However, over the decades, USC’s promise steadily diminished. Rampant mismanagement, corruption, and embezzlement turned the network into a liability rather than an asset. For much of its history, the corporation epitomised the failures of Pakistan’s public sector management. According to the latest report from the Ministry of Finance, USC recorded a staggering Rs4.1 billion loss in the first six months of the last fiscal year, pushing cumulative losses to Rs15.5 billion. These numbers lay bare the deep structural and operational deficiencies that plagued the organisation.
Utility stores were originally conceived as a mechanism to stabilise household budgets and provide an accessible, state-backed retail option for essential items like flour, sugar, ghee, and pulses. The idea was simple: shield the lower and lower-middle-income segments from market shocks, seasonal price hikes, and profiteering. In practice, however, the stores became synonymous with inefficiency.
Despite serving as an early model of a modern retail chain, USC failed to sustain its relevance because political appointments, lack of professional management, and poor oversight undermined its operations. Instead of evolving into an effective social safety net, it became a loss-making enterprise reliant on the national exchequer. Even when discussions on reform and restructuring gained momentum in recent years, no concrete measures were implemented to revive the network on modern lines.
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The debate around USC’s reform largely revolved around digitisation, stricter oversight, and plugging financial leakages. Advocates argued that modern inventory systems and transparent governance could make the network viable. But expecting a cash-strapped and bureaucratically rigid government to run a nationwide retail chain of nearly 4,000 stores was always unrealistic.
Retail today is a high-speed, competitive, and efficiency-driven sector. Success in this domain requires quick decision-making, customer-centric strategies, and advanced supply chain management — qualities rarely associated with Pakistan’s public sector. Moreover, the age of untargeted subsidies has effectively ended. Governments globally are moving towards direct, data-driven, and targeted cash support to vulnerable populations rather than maintaining costly retail operations that bleed public finances.
The government’s decision to close USC and pursue the privatisation of other loss-making entities like PIA reflects a broader shift toward fiscal rationalisation. With Pakistan under pressure to reduce deficits and adhere to commitments made with international financial institutions, continuing to finance white elephants was untenable.
However, the policy execution remains sluggish. Despite repeated announcements, both the winding down of USC and the sale of other state-owned enterprises suffer from delays, reflecting the absence of a coherent, time-bound strategy. Mixed signals — where the government alternates between promising revival and signalling closure — only deepen public and investor uncertainty.
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One of the core lessons from USC’s collapse is that structural reform requires political will and administrative clarity. Successive governments failed to choose between two clear options: either overhaul the corporation into a modern, tech-driven, lean retail network or shut it down entirely to cut losses. The indecision prolonged inefficiency and multiplied fiscal losses.
The corporation could have played a transformative role in poverty alleviation if properly integrated with social protection programmes like the Benazir Income Support Programme (BISP). Targeted subsidies could have been channelled through USC outlets to benefit verified low-income households while modern inventory systems reduced pilferage. Instead, years of neglect and political hesitation resulted in a system that served neither the poor nor the state.
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Pakistan’s economic realities have rendered untargeted, state-managed subsidy models obsolete. Modern governance demands targeted cash transfers, digital monitoring, and private sector efficiency. The USC experiment proves that attempting to compete with private retailers without professional management and market-driven practices is a recipe for repeated failure.
The closure of utility stores is not just a fiscal measure; it is a symbolic admission that Pakistan must abandon outdated models of social protection that rely on inefficient state enterprises. It also signals the urgent need for governments to embrace innovation, technology, and partnerships with the private sector to meet the demands of a rapidly changing economy.
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The demise of the Utility Stores Corporation is a cautionary tale of lost potential and systemic inefficiency. It reflects a broader pattern of Pakistan’s public sector enterprises failing due to mismanagement, lack of innovation, and political indecision. If the government is serious about fiscal discipline and social protection, it must commit to coherent policies: divest from failing entities, adopt targeted support mechanisms, and invest in modern, technology-driven solutions.
Ultimately, Pakistan’s poor deserve a reliable safety net — but not at the cost of perpetuating inefficient institutions that drain the national treasury. Learning from the USC experience, policymakers must now prioritise governance reforms over nostalgia, ensuring that public resources are deployed where they have the greatest impact.
